Everything you need to know about starting a small business as a newcomer

If you're new to Canada and want to start a small business, you've come to the right country. Canada boasts a strong economy and cultural diversity and, as a business owner, you have access to domestic and international markets.

Ready to get started? We’ll walk you through tips to help you grow a successful business as a newcomer. 

Make sure you can legally own and operate a business in Canada. To check your legal status, visit Immigration, Refugees and Citizenship Canada (IRCC).

You'll also need to know about taxes and other financial obligations as a small business owner. If you have questions, you can review the government of Canada’s checklist for small businesses to learn more.

Before you launch your new venture, you'll have to choose how to set up your business. There are four legal business structures in Canada and each has their own pros and cons.

They are:

• Sole proprietorship
• Partnership
• Corporation
• Cooperative

If you're not sure which one will work best for you, talk to a Scotiabank small business advisor.

Next, choose a unique name for your business. Make sure it complies with Canadian regulations, and that another company isn't already using it. (Check the guidelines for naming a business here.)

Finally, you need to register your company. Visit the Government of Canada website to learn more about how to do that. Depending on what kind of business you're launching, you may also need to get certain permits or licenses at the federal, provincial or municipal levels.

A business plan is like a roadmap. It helps explain what your business is and outlines your goals and how you plan to meet them. It can also help you pinpoint what risks and challenges may impact your business.  

If you want others to invest money in your business, you'll need a well-defined business plan to convince them that your idea is a good one.

Scotiabank's Business Plan Writer is a great place to start. This interactive online tool walks you through each step you need to take to create a solid business plan. It explains important terms and helps you organize your thoughts and ideas. 

While it may be tempting to jump right into starting your new business venture, it’s vital to learn who your customers and competitors are. Talk to other business owners and experts in your field to learn what you can expect — and what to watch out for.

ACCES Employment is a great resource to help you get started. They offer a helpful program with information sessions to assist you throughout this process.

Starting a new business doesn't only take time, it also takes capital (or money). You need capital to start up your business, like for renting space or buying equipment.

You also need funds to pay for the day-to-day costs of running a business. That includes costs like rent, heat and electricity, paying the people who work for you, and buying supplies until your business starts making money. 

Starting a new business is often a passion project, so it makes sense that many people use their own money. After all, who knows your business better than you? Investing your own money also shows other people that you believe in yourself. Not only that, but with your own funds, you have control and can make all your own decisions.

But you don't want to spend all your money on your business — you need to make sure you have money to cover your personal expenses. And unless you have unlimited funds, your business can only grow as much as the personal capital you have to invest.

Are you considering asking friends or family members to help contribute? Make sure you set clear expectations and boundaries at the beginning. Work with a lawyer to create a written agreement that explains how your friends or family will support your business. The agreement should include how you'll repay them and if they'll own part of your company. 

There are many ways to finance your business, but first, let’s talk about something called your credit score.

A credit score is a number that tells banks, credit unions and credit card companies whether you are thought to be trusted to borrow money or not. Credit scores range from 300 to 900 in Canada. The higher your score, the more likely it is that financial companies will loan you money.

To prove that you're someone that lenders can trust, build up your credit score. Two ways you can do that is to pay your bills on time and keep the balance on your credit card low. Learn more about how to increase your credit score.

Once you have a strong credit score here in Canada (which can take three to six months), you'll have other funding options. 

Banks and credit unions make it relatively easy for small businesses to borrow money. They also can provide good interest rates and repayment terms — depending on your credit score.

• Term loans: These are loans with a fixed repayment term — which means you have a deadline for when you have to pay the money back. Short-term loans have a short repayment term (like six to 12 months), while long-term loans allow you a longer period (like three to seven years or more). You can use term loans to pay for things like buying equipment or growing your business. Scotiabank has loan and lease solutions to meet your business needs.
• Lines of credit: A line of credit gives you access to a revolving credit limit. It's called "revolving" because you can borrow the money only when you need it, pay it back, and then borrow it again. You can borrow up to a certain amount, and you only pay interest on the money you use.
• Leasing: You might consider getting a lease if you need a particular asset or piece of equipment for your business. With Scotia Leasing¹, you have the ability to acquire equipment so you don't have to apply for credit each time. This can help you minimize the impact to your cash flow and get the asset or equipment for your business.

Want to learn more? Book an appointment with a Scotiabank small business advisor. They can help you understand the different ways to borrow money, and help you decide what’s best for you and your business.

Small businesses are very important to Canada’s economy; they drive innovation and create jobs. So, it makes sense that the Canadian government helps small businesses to grow through incentives like grants, tax breaks, wage subsidies, or loan guarantees. Start your search with the Business Benefits Finder — you'll find help for every stage of your business. 

The CSBFP is a loan program designed to help small businesses access financing.

Here's how it works: The federal government works with banks and credit unions to guarantee a portion of the loan they provide. This helps make lending money to small businesses less risky for banks, so they're more willing to lend to new business owners like you.

Learn about Scotiabank’s Canadian Small Business Financing Program – Term Loan. It offers up to $1 million, for up to 90% of eligible purchases.

Startup Canada connects entrepreneurs with the support, community, and tools they need to build a successful business in Canada. Scotiabank has partnered with Startup Canada to provide guidance, eliminate barriers, and champion the needs of each and every entrepreneur to private and public sector partners through their flagship and digital programs. Startup Canada supports entrepreneurs, including newcomers, in starting up and scaling up to ultimately make Canada the best place to start and build a business. 

The CIIP program helps Canadian businesses work with international partners in countries like Brazil, China, India, Israel or South Korea, to develop new or improved products, services or processes. 

Most provinces in Canada also offer support to businesses and entrepreneurs. Alberta, for instance, has a program called the Canada-Alberta Job Grant. It helps share the cost of training new and existing employees between employers and the government.

In Ontario, the Canada-Ontario Job Grant Program helps business owners invest in the people who work for them, with up to $10,000 in support per person for training costs.

Visit the Government of Canada website to search for grants, credits and funding.

If you have a great business idea, you may be able to get "angel investors" to support you. Angel investors invest their own money in new companies that they believe will grow. In exchange, they own a percentage of your business. Learn more by visiting the National Angel Capital Organization.

Moving to Canada and starting a small business takes a lot of determination and inspiration. Not only do you have to get used to a new country and a different culture, but you also have to find the right people to help you get started.

Scotiabank can help you with your plan for your new business. Meet with our advisors to talk about solutions and advice that can help your new business dreams come true.